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OCBC launches first tech ETF in Singapore

The IPO of the Lion-OCBC Securities Hang Seng TECH ETF began yesterday, after receiving Monetary Authority of Singapore (MAS) authorisation earlier this month.
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Jointly launched by Lion Global Investors and OCBC Securities (both of which are part of the OCBC Group), it will be the first ETF listed on the Singapore Exchange (SGX) that invests in technology companies. Investors will gain access to a portfolio comprising the largest technology stocks listed in Hong Kong, which include Alibaba, Tencent, Meituan, Xiaomi and Lenovo.

“We have seen how the pandemic impacted our lives and how technology has stepped in to give a glimpse of normalcy in the changed world. The technology sector has significantly outperformed the  broader equity market during this period and technology stocks have benefitted from changes in consumer behaviour as well as digital transformation of businesses,” Wilson He, managing director of OCBC Securities told FSA.

The Lion-OCBC Securities Hang Seng TECH ETF IPO runs from 23 November to 7 December 2020, and the ETF will be listed on SGX on 10 December.

Participating dealers during the IPO include OCBC Securities, UOB Kay Hian, Philip Securities and iFast Financial, and unlike for stock IPOs, investors will get a full allotment of the ETF units they subscribe for. Minimum IPO subscriptions are for 5,000 units if investors use OCBC Securities, which is offering zero commission for orders placed between 23 November and 3 December.

The designated (secondary) market makers are Flow Traders Asia and Phillip Securities, according to the fund factsheet.

The Hang Seng TECH Index was launched on 27 July 2020, and has risen by about 18% in local currency and US dollar terms (the Hong Kong dollar is pegged at a fixed rate to the greenback) between its inception and 20 November, according to Bloomberg data.

The index tracks the 30 largest tech-themed companies listed in Hong Kong. It is reviewed quarterly and has an IPO fast entry rule which allows for qualified IPOs to be included in the index shortly after listing. The weighting of each stock in the Index is capped at 8% during rebalancing, according to the index fact sheet.

There are currently four Hang Seng TECH ETFs listed on Hong Kong Exchange, which are managed by CSOP Asset Management, China Asset Management, Hang Seng Investment Management and Blackrock respectively. However, Singaporeans are exposed to currency risk if they invest in it.

The new SGX-listed vehicle can be traded in both Singapore dollars and US dollars, with a total annual expense ratio of only 0.68%, compared with 1.05% chargeable by the Hong Kong-listed product, according to OCBC Securities.

The ETF is classified as an excluded investment product, which means that retail investors can trade in it immediately without needing a customer account review certification.

“The Lion-OCBC Securities Hang Seng TECH ETF comes at the right time to ride a wave of change and bullish sentiment. It allows investors a chance to gain access to the rapidly-growing Chinese technology giants,” said He.

It is the second ETF launched by Lion Global Investors, the first one being the Lion-Phillip S-Reit ETF, according to SGX records.

Part of the Mark Allen Group.